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Rhinos and Red Wings and Rattlers, oh my

As
any African guide will tell you, it's not a good idea to taunt a Rhino. But it
seems the members of the Greater Rochester Sports Authority haven't been on a
safari in quite some time. And if they don't placate both Rochester's Rhinos
and Red Wings, there could be a stampede out of town.

On September 9, the authority --- a
three-member body created by the state to facilitate construction of a
soccer-specific stadium downtown and oversee operations at Frontier Field ---
voted to conduct a study examining ways Frontier can be retrofitted to better
accommodate both the Rochester Rhinos soccer team and the Rochester Red Wings
minor league baseball franchise. The authority also voted to terminate the
Rochester Rattlers lacrosse team's lease at Frontier.

The votes shocked and angered Rhinos
and Rattlers fans and owners (the two teams have common principals). Proponents
of a soccer-specific stadium have been frustrated by a series of setbacks and
political squabbles since the stadium project began over two years ago.

Recent discussions between Rhinos
President Frank DuRoss and County Executive Jack Doyle about the possibility of
constructing a scaled-down version of the proposed PaeTec Park downtown had
buoyed the owners' hopes. But the authority's September 7 votes have cast doubt
as to whether even a compromise plan for PaeTec will be realized.

In making its
decision,
the board said it believed a soccer-specific stadium would not be economically
feasible to construct and maintain. That conclusion dumbfounds Rhinos
officials, who feel they've put together a solid financial plan. That plan
includes $15 million in state funding, $7 million from the county, $6 million
in annual revenue from the Rhinos, and $22 million from bonds issued by the
authority, but paid back by the Rhinos.

Rhinos officials say they don't have
a clear idea what part of the financing plan the authority is questioning, but
DuRoss suspects they're worried about the bonds. "They believe we would be
unsuccessful in trying to sell taxable bonds, or if we did, the revenue stream
[to back the bonds] wouldn't be enough," he says.

The authority "thinks this will fall
on the taxpayers," DuRoss continues. "And it doesn't, obviously." The bonds
would be "private investments," he says, investments that carry some risks, but
also offer a commensurately high return --- 9.5 percent.

"There's no guarantee from the
county or the state" to repay bondholders, DuRoss says. "If you think about
[the authority's] concerns, the bondholders would have more concerns than the
authority, you would think."

Authority board member --- and
former County Executive --- Tom Frey knows the bonds wouldn't be backed by
public money, but he fears investors would demand that the county or state step
in if the bonds weren't repaid. "If [the Rhinos] went under and left
bondholders outstanding, it wouldn't take long for the county or the state to
bail them out," Frey says. "There'd be pressure to bail them out."

Frey also points to an authority
study that determined a downtown stadium would cost as much as $57 million to
construct, largely due to the cost of acquiring property on the proposed site
near Frontier Field. Building PaeTec Park in Gates, as the Rhinos' owners and
some state lawmakers have proposed, is not only counter to the provisions by
which the project qualifies for state aid, but is also questionable
financially, Frey says.

Frey says the authority did consider
a scaled-down stadium downtown. "It's cheaper, but not enough cheaper that they
could do it," he says.

The real
sticking point, however, seems to be based on the county's experience with
Frontier Field. "I start off with one proposition," Frey says. "We built a
stadium for a team [the Red Wings] that has 72 dates, and the county's losing
$2 million a year [on Frontier Field]. How do we build a separate stadium for a
team that has 14 dates --- 18 at most --- and expect that not to lose money?
There's no logic there."

Doyle has also expressed
reservations about building PaeTec Park, given that the county has spent about
$12 million to pay off Frontier Field's debt. He's said the county's $7 million
contribution ($700,000 for 10 years from revenues generated by an increase in
the hotel-motel tax) is contingent upon the state paying off Frontier Field's
remaining $24 million in debt.

PaeTec's proponents have said
revenue from Rhinos and Rattlers games, combined with income from other
sporting and cultural events, including concerts, would keep the stadium in the
black. But Frey says big rock shows and the like "never showed up at Frontier
[and] they're unlikely to show up at another stadium, when we have the Finger
Lakes [Performing Arts Center] and Darien Lake."

Frey is convinced a retrofit of
Frontier would work, and he's committed to addressing the Rhinos' concerns over
the lack of field-side seating, locker room space, and other issues. But
financial, rather than physical, hurdles pose the greatest risk to the Rhinos'
future in Rochester.

The Rhinos have the option of
extending their lease at Frontier for another year this October. But team
officials have said they'll be seeking a greater percentage of revenue from
concessions (the team currently gets five percent), ticket sales, and other
sources when lease negotiations take place later this month. Given concerns the
authority and county officials have about Frontier Field's finances, the
negotiations will likely pit the Rhinos' interests against those of the field's
original tenant, the Red Wings.

The Rhinos,
the Red Wings, and Frey all think the baseball team's lease is exceptional, but for
very different reasons.

According to Red Wings chief
operating officer Naomi Silver, the county gets all the parking revenue from
Red Wings games, most of the revenue from suites, all the ad revenue on some
signs, and some of the money from concession sales. If the team's season
attendance tops 300,000 --- which hasn't happened for the last few years ---
the county gets a greater share of ad and concession revenue.

"The county gets more revenues from
the Red Wings than any lease I'm aware of," says Silver, referring to sports
teams in other cities that have similar arrangements with their municipalities.

Rossi, of the Rhinos, says the Red
Wings' deal at Frontier is "the most unique lease I've ever seen in
professional sports" --- a comment based as much in envy as exasperation. He's
particularly critical of the clause allowing the Red Wings to keep a greater
share of revenue when attendance falls below 300,000 --- a provision that seems
to reward the team for failing to attract fans. "If I were a business man, why
would I announce 300,000 in attendance?" he says. "I'd tell my ticket
department to go home."

Frey is also critical of the way the
Wings' lease was structured. "It's unfortunate that lease lasts until 2016," he
says. "That's one of the dumbest things that was done in connection with this
stadium."

Convincing the Red Wings to
restructure their lease with the county in order to sweeten the Rhinos' deal
will be a hard sell. Asked if she'd be willing to renegotiate her team's lease,
Silver offered a simple answer: "No."

"We have many reasons for feeling a
renegotiation of the lease would be very difficult to conceive of," she
continued.

"Our own attendance is suffering,"
Silver says. "That's largely due to local economics, the fact the competition
for the sports dollar in Rochester has so vastly changed since we negotiated
our lease.

"We have reason to believe our
revenues will be diminished," she continues. "We would not want to put
ourselves in a position to threaten our own future."

Besides, Silver says, a lease is,
after all, a lease, and past agreements shouldn't necessarily be restructured
just because circumstances have since changed. "What problems the county has
had with stadium debt really relates to the fact the stadium cost them much
more than what was originally anticipated," she says. According to Silver, when
Frontier Field was being built, former County Executive Bob King agreed that
the Red Wings wouldn't be financially responsible for losses resulting from the
cost over-runs.

Frey, however, is less
understanding. When the Rhinos meet with Frontier Field officials to discuss
their lease, he says the Red Wings "could destroy the whole deal" if they're
not willing renegotiate their lease with the county to make Frontier Field a
more financially attractive place for the stadium's other major tenant.

"It'll take cooperation from the Red
Wings, as well as the Rhinos, to make this work," he says. "The Red Wings have
to face up to that. They would have a very unhappy landlord if they don't."

As to whether the Rhinos will
exercise their option to extend their lease at Frontier another year, Rossi
says, "I don't think it's a done deal." The authority's decisions to evict the
Rattlers and study a retrofit of Frontier "have made us raise an eyebrow," he
says.

When it comes time to negotiate,
"The ownership group here will make a business decision," Rossi says. "There
are only so many times they can say, 'We'll do it for the fans, we'll do it for
soccer, we'll do it for the good of the game.'"

But he also adds, "Having said that,
more times than not, their heart leads more than their wallet."